A businessman told the Auckland District Court he invested $1.6 million in the schemes of Loizos Michaels.

The businessman's identity is the subject of a suppression order and he is a key witness for the Crown in the trial of Michaels, who faces 31 counts of fraud. Michaels has pleaded not guilty.

The businessman said he first had contact with one of Michaels' associates in July 2007, and over the course of the next year invested more than $1m in a proposed online casino venture.

The businessman said he was unaware of the identity of Michaels at the start of this arrangement, knowing him only as "M".

In June 2008 the businessman said he was requested to advance a "final payment" and was given specific instructions as to its delivery.

Defence lawyer Peter Kaye questioned the wisdom of leaving such a sum where he did. "That seems a fairly sordid sort of surround to leave investments funds," he said.

Despite the delivery no returns were forthcoming and the businessman saida later confrontation with Michaels turned sour.

By September 2008 the businessman accepted the funds had gone.

Micheals is accused by the Crown of spinning a "web of deceit", convincing people he was backed by a Macau gambling empire which was planning a takeover of SkyCity.

Former SkyCity managing director Evan Davies also gave evidence that word of this sham takeover had reached his office.

"It seemed to be more than gossip. There was a suggestion that people thought it was a serious prospect," he said.

Davies told the court the takeover was said to be being fronted by former Christchurch Casino executives Stephen Lyttelton and Peter Arbuckle and may have had involvement by National Party figures Gerry Brownlee and Peter Goodfellow.

Earlier the court had heard a company, New Zealand Casino Services, was registered to purportedly effect the takeover of SkyCity. Lyttelton, Arbuckle, Brownlee and Goodfellow were all directors of this entity, but the latter two resigned weeks after joining.

Davies said he had often had contact with Lyttelton, but the acting chief executive's behaviour seemed to deteriorate in 2007.